PPF (Public Provident Fund)

Public Provident Fund (PPF) is a scheme by Central Government. It is a Tax free saving scheme. Account operating period shall be 15 years unless the depositor wants to extend it.

• Advantages
• Deposited amount is exempted form Income Tax under Section 80C 
• You can get 8.1% per annum interest rate (More as compared to Bank Deposits)
• No Risk involved
• Returns on PPF money is Tax Free
• There is no compulsion on the Depositor except minimum of Rs.500/- per Year
• For the money deposited n the 15th year, you will have a lock in period of only 1 year and you will get complete tax benefit. Similarly for 14th year, only 2 years lock in period, For 13th year, only 3 years lock in period.
• Interest will be compounded every year
• You can deposit up to 1.5L per year into PPF account
• Withdrawals will be exempted from wealth Tax
• PPF funds cann't be attached under court order or laid claim to by creditors
• Disadvantages
• Long Lock in period of 15 Years
• Not liquid until 15 years are completed
• Less returns compared to Mutual Funds
• Notes
• Suitable for long term Investments
• Open your PPF account as soon as possible after getting a job. 
• If you don't want to Lock your money in PPF account then deposit only Minimum amount(Rs. 500/-) per year in the initial years to keep your account active. After completion of 10th year, Lock in period will be very less for your deposited money, then you can deposit as much money as you want.
• Under 80C section you can show upto 1.5L per year